Oracle saved the biggest news for last at its OpenWorld conference in San Francisco. CEO Larry Ellison took the stage Wednesday afternoon to announce two hardware products developed with Hewlett-Packard that are designed to provide very high performance for data warehousing applications.

The Exadata Storage Server includes a dozen disk drives and two quad-core Intel processors that are used to perform database query operations on the storage equipment itself, reducing the amount of data that has to be shuttled back to the database server.

This gives a 10-fold performance boost compared to Oracle’s current data warehouse products, according to Ellison.

“The storage system itself runs the Oracle database’s fast parallel query software, so we took the capability you normally find in the database servers and moved it into the storage server next to each and every disk drive,” Ellison said.

“We’re taking a tremendous load off the interconnect between the server and the storage grid, returning just the query results instead of whole data blocks. It makes a huge difference,” he added.

The storage servers can be ordered separately for use with an existing Oracle data warehouse, or as part of the HP Oracle Database Machine, which includes eight Oracle database servers and 14 Exadata Storage Servers in one rack. The database servers include 64 Intel processor cores, Oracle’s business intelligence software and its Real Application Clusters technology.

Each storage server is connected to the database server with two InfiniBand pipes. Each can carry data at 20G bits per second, but the speed of the system is limited to the speed of the disk drives, which limit the throughput speed to 1G bits per second, Ellison said.

The Storage Servers include up to 168T bytes of storage, he said.

Ever the showman, Ellison chuckled with delight as he stood next to one of the hulking Database Machines on stage. Joking about the storage capacity, he quipped, “This is 1,400 times larger than Apple’s largest iPod.”

The Linux version of the Database Machine is available immediately, he said, with support for other operating systems to follow.

He said the Exadata Storage Server will work with “any Oracle database server,” suggesting customers won’t have to be using the current 11g version for their data warehouse.

The Database Machine is priced at US$4,000 per terabyte of storage, plus the database license costs, Oracle said. The systems can be ordered from Oracle, and Oracle will be responsible for sales and support, while HP will handle the delivery and servicing of the hardware.

As Oracle enters the hardware game, data in the enterprise “is proliferating at astonishingly high rates,” Ellison said.

“That creates a fundamental problem. The disk storage systems that are available today … can store 10, 100T bytes of data, but they can’t move that data off the disks and into the database servers very fast,” he said.

There are two ways to solve the data bandwidth problem, he said: reduce the amount of data going through the pipes or make the pipes wider. Oracle did both, he said.

He claimed the resulting product is much faster than competing data warehousing systems like those sold by Teradata and Netezza.

“Teradata has no intelligence in their storage server whatsoever. None,” Ellison said, while allowing that Teradata’s database is “pretty sophisticated.”

“Netezza does very fast table scans,” he said, “but their overall database capability is really primitive.”

Netezza’s president, Jim Baum, shot back quickly in a statement. He dismissed the Oracle-HP products, saying data warehouses need to be designed “from the ground up” by engineers in the same company, not patched together “with glue and spit.”

A Teradata spokesman was more diplomatic.

“On a high level, it’s very difficult for us to comment on the performance claims of Oracle. … We respect all of our competitors and look forward to competing against Oracle with this new offering,” said Randy Lea, Teradata vice president of product and services marketing.

“We’re still trying understand it a little bit more, and get more detail,” Lea said. “We’re not exactly sure what type of smart storage they’re using and what advantages and limitations there are at this point in time.”

Still another competitor weighed in.

“Oracle still has to prove their credibility in the large database space, which was traditionally Teradata and more recently companies like ours,” said Scott Yara, founder and president of Greenplum, another data warehousing appliance vendor. “This was about them trying to achieve parity.”

In a blog posting Wednesday, Forrester Research analyst James Kobielus called the products “a bold move into petabyte scale-out territory, an emerging, very-high-end niche in which one veteran vendor, Teradata, has been pre-eminent.”

Oracle’s storage layer is transparent to applications, meaning they don’t need to be rewritten to see performance gains, he wrote.

That said, Oracle is “just one of several [data warehouse] vendors that have petabyte-scale solutions. It’s best not to get all whipped up in a lather by an artfully constructed event-based marketing tease.”

More information about the Exadata Storage Server is available on HP’s Web site.